The UK Property Market in 2019: An Overview of Expected and Potential Trends
Whether you own investment properties, your own home or are considering climbing the first rung of the property ladder, you will have a keen interest in the influences and conditions that will define UK house price trends over 2019. Last year marked a general trend of a slowdown in the UK property market as Brexit uncertainty bit and buyers and sellers both started to delay decisions for a more certain economic climate. Prime London property was most impacted with prices sliding. However, it was also a year of regional divergence as some markets, especially big cities from the Midlands north, managed to maintain strong growth.
Overall, the UK average was still one of overall house price growth, with properties selling from an average of 2.7% more than they did the previous year. However, that figure does represent the slowest growth rate in 5 years and there are concerns the London and South East slowdown may now be beginning to infect the rest of the country. However, an underlying shortage of new housing supply still defines the long term horizon of the UK residential property market. Many property sector professionals believe that means a Brexit deal, should it eventuate, could release pent up demand, firing the market back to life. A recent article in The Times newspaper canvassed industry experts for their insight into how 2019 might be expected to play out.
Strutt & Parker’s head of research Stephanie McMahon held the most optimistic outlook of all of the experts whose outlooks were canvassed. Her agency retains faith that 2019 will still see overall average house price growth of 2.5% if a Brexit deal is achieved, with price growth then accelerating to an overall 18% by 2022. However, she admits this is heavily reliant on a positive political and economic backdrop and the worst case scenario of a no-deal Brexit could knock another 5% of the going rate for prime London properties.
Savills’ director of residential research Lucian Cook thinks the most likely 2019 scenario for property prices is a 2% contraction for London prices and slower growth than in 2018 further north. However, he things the balance will still result in average countrywide growth of around 1.5% over the year after a predicted quiet first quarter gives way to more normal market conditions by spring.
The Royal Institute of Chartered Surveyors (RICS) is one of the country’s most respected views on UK property price trends. The industry body is forecasting a ‘flat’ year over which average house prices will remain constant with 2018 levels and sales volumes will slide 5%. However, there is some good news for those with investment properties. RICS thinks that tight supply will lead to a slight rise in rental values.
Knight Frank is one of the more pessimistic of the industry experts asked to give their 2019 outlook. The property consultancy and agency expects an average 1% drop in asking prices over the year. That is based on head of UK residential research Gráinne Gilmore’s prediction that price growth will flatten in many of the regions that showed positive returns last year. She also thinks that London prices will contract by another 2% before the end of the year.
She also thinks rents will increase slightly as more buy-to-let landlords leave the market, put off by changes to the tax regime. However, Knight Frank believes 2019 will also be characterised by further growth in the ‘build-to-rent’ sector. Build-to-rent refers to property developments designed to be acquired by large, often institutional, investors and consisting of apartments that will be placed on the rental market long term and managed by specialist property managers rather than sold to individual home owners.
JLL director of residential research Nick Whitten holds a view that is contrary to much of the market. He is optimistic on London, where he thinks prices will either remain flat or show modest growth, but believes much of the north will see contraction, following the trend set by London last year. However, he has a positive outlook for prices in Leeds and Edinburgh which he assesses as being characterised by undersupply.
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